HP Decides to Keep PC Division, Reversing Last CEO

Hewlett-Packard will remain the world's No. 1 PC maker. The company decided not to spin off its Personal Systems Group after all.

The move came about two months after prior CEO Leo Apotheker announced the world's biggest computer services company would sell it or spin it off to shareholders. New CEO Meg Whitman said keeping PSG within HP is right for customers and partners.

The Palo Alto, Calif.-based HP conducted a strategic review by Whitman, who was elected HP CEO on Sept. 22 when Apotheker was ousted.

HP will close its fourth quarter Monday and financial results are to be reported in mid-November. That means the company won't have to report PC sales as discontinued items or begin the costly process of spinning it off or hiring bankers for a sale. Apotheker had said HP would be better off selling higher-margin software and services.

As the world's biggest PC maker --- a mark it earned by acquiring Compaq Computer and other smaller vendors -- HP enjoys major economies of scale. It can negotiate lower prices from chip makers such as Intel and Advanced Micro Devices, Samsung Electronics and others.

Also, the size makes easier relations with major software developers like Microsoft, Symantec and others, so that it can load applications once customers order a new unit.

Todd Bradley, EVP of the PSG group, said the move should provide customers products across a broad portfolio of PCs, workstations and more.

HP shares closed at $26.99, up 4.82 percent, giving the company a market capitalization of $53.6 billion. Shares rose about one percent in after-hours trading following the PC announcement.

The shares have gained 14.4 percent since Whitman was elected HP CEO.